Investing for the first time can feel overwhelming — but who better to guide you than Warren Buffett, one of the most successful investors ever?
Known for his straightforward approach and long-term focus, Buffett's advice is invaluable for beginners. His strategies are simple yet powerful, designed to help everyday investors make smart decisions.
Let's dive into 10 essential tips from the Oracle of Omaha to help set you on the right path.
Steal this billionaire wealth-building technique
The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.
A new company called Masterworks is now allowing everyday investors to get in on this type of previously-exclusive investment. You can buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.
If you have at least $10k to invest and are ready to explore diversifying beyond stocks and bonds,see what Masterworks has on offer. (Hurry, they often sell out!)
Start with low-cost index funds
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Buffett frequently recommends low-cost index funds for new investors. These funds track a specific market index, such as the S&P 500, allowing you to invest in various companies without picking individual stocks. Index funds come with lower fees and offer instant diversification, which reduces your risk.
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Avoid timing the market
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One of Buffett's golden rules is to avoid trying to time the market. That means not buying or selling stocks based on short-term market movements. No one can accurately predict what the stock market will do tomorrow, next week, or even next year. Instead, Buffett advises investors to adopt a long-term strategy — buying good investments and holding onto them, regardless of market fluctuations.
Understand what you're investing in
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Buffett believes it's crucial to understand what you're investing in. Before buying a stock, ask yourself if you know how the company makes money and whether you believe in its long-term success. This ensures you invest in businesses you understand, reducing the likelihood of making poor decisions based on hype or speculation. In Buffett's words, "Risk comes from not knowing what you're doing."
Get a free stock valued between $5 to $200
Secret: You don't need thousands of dollars to buy thousand-dollar stocks or create a diverse portfolio.
Robinhood offers a method of investing called “fractional shares.” On its own, one share of a single stock could cost a lot of money, making it difficult to diversify. Robinhood allows you to buy pieces of stock instead, so you have the option to build a diverse portfolio quickly.
Let’s say you want to invest $250, as an example.
With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.1 <p>This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice. </p> <p>To get stock reward, new customers need to sign up, get approved, and link their bank account. Stock rewards shares cannot be sold until 3 trading days after the reward is granted and the cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at <a href="https://robinhood.com/us/en/support/articles/open-account-pick-your-stock/">rbnhd.co/freestock</a>.</p> <p>Fractional shares are illiquid outside of Robinhood and are not transferable. Not all securities available through Robinhood are eligible for fractional share orders. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see the Fractional Shares section of our Customer Agreement.</p> Robinhood Gold is offered through Robinhood Financial LLC and is a membership offering premium services available for a fee.</p>
Even better news? Add a Robinhood Gold membership, and you’ll get access to 4.25% (as of 11/15/24) APY2 <p>Annual Percentage Yield. Rate valid as of April 12, 2024. To earn interest, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest. Interest rates for cash sweep and margin investing can change at any time. Fees may reduce interest earnings.</p> on your uninvested cash3 <p>Interest is earned on uninvested cash swept from your brokerage account to partner banks. Partner banks pay interest on your swept cash, minus any fees paid to Robinhood. As of Nov 15, 2023, the Annual Percentage Yield (APY) that you will receive is 1.5%, or 5% for Gold customers. The APY might change at any time at the partner banks' or Robinhood's discretion. Additionally, any fees Robinhood receives may vary and are subject to change. Neither Robinhood Financial LLC nor any of its affiliates are banks.</p> <p>All investments involve risk and loss of principal is possible.</p> <p>Robinhood Financial LLC (member SIPC), is a registered broker dealer.</p> and the ability to buy and sell stocks 24 hours a day, 5 days a week.
Open and fund a Robinhood account and earn up to $200 in stock
Invest in businesses with a strong competitive advantage
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Buffett often emphasizes the importance of investing in companies with a "moat" — a strong competitive advantage that protects them from competitors. This could be a recognizable brand, patented technology, or superior cost structure.
Businesses with a solid moat are more likely to thrive and grow over the long term, making them better investments. Look for companies that dominate their industries and have a durable edge over competitors.
Pick good companies
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Buffett's philosophy is to invest in companies with solid fundamentals, including reliable earnings, good management, and sustainable business models. He prefers businesses that are easy to understand and that have a proven track record of success.
Buffett's approach is simple: if you wouldn't feel comfortable owning a company for 10 years, don't consider it as a short-term investment either.
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Never lose money
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One of Buffett's most famous advice is: "Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1." While it's impossible to avoid all losses, Buffett's point is that your primary focus should be preserving your capital.
Take the time to research investments and avoid making risky bets that could lead to significant losses. After all, protecting your money is just as important as growing it.
Don't panic sell your investments
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Buffett warns against letting emotions drive your investment decisions. The stock market can be volatile, with prices increasing in the short term.
However, panic selling when markets dip can lock in losses and prevent you from benefiting when the market recovers. Buffett advises staying calm during downturns and remembering that the market tends to rise over the long term.
Be mindful of investment fees
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Investment fees may seem small, but they can reduce returns over time. Buffett advocates for low-cost investments, such as index funds, to keep fees to a minimum.
Whether you're paying for fund management or making frequent trades, knowing how much you pay in fees is essential. Every dollar you save on fees is a dollar that can continue growing in your investment portfolio.
Do your own research
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Buffett strongly advocates doing your homework before investing. While it's easy to be influenced by financial news or the latest stock tip from a friend, Buffett advises new investors to focus on the fundamentals.
Take the time to research companies, read their financial statements, and understand their business models. The more informed you are, the better equipped you'll be to make smart investment decisions.
Earn up to a $300 bonus and grow your money with up to 3.80% APY
This powerful combination checking + savings account from SoFi® allows you to earn up to a $300 bonus with direct deposit and grow your money with up to 3.80% APY.4 <p>New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) <b>OR</b> $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. See full bonus and annual percentage yield (APY) terms at <a href="http://www.sofi.com/banking#1">sofi.com/banking#1</a>. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC.</p> <p>SoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of Jan. 24, 2025. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a>. See the SoFi Plus Terms and Conditions at <a href="https://www.sofi.com/terms-of-use/#plus">https://www.sofi.com/terms-of-use/#plus</a>.</p>
This is one of the top accounts we’ve seen, and offers like this can be rare. You work hard, and now it’s time to make your money work for you — with SoFi, you can grow your money with hardly any effort!
SoFi has no account or overdraft fees5 <p>Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the "Start Date" and "End Date" set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the "30-Day Evaluation Period"). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.<br></p> and additional FDIC insurance up to $2 million on deposits is available through a seamless network of participating banks.6 <p>We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at <a href="http://sofi.com/legal/banking-fees/">sofi.com/legal/banking-fees/</a></p> 7 <p><b>SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a></b></p> Plus, you can receive your paycheck up to 2 days early.8 <p>Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.</p>
How to earn up to $300: Sign up and make a direct deposit within the first 25 calendar days of the promotional period, then collect a $300 cash bonus with a direct deposit of $5,000 or more.
SoFi is a Member, FDIC. 7 <p><b>SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a></b></p>
Open your SoFi account and set up direct deposit
Start investing early
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Buffett is a huge advocate of starting early. Thanks to the power of compound interest, even small amounts of money invested at a young age can grow significantly over time. The longer you leave your money in the market, the more time it has to grow. Whether you're 25 or 55, the best time to start investing is now.
Bottom line
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Warren Buffett's investment advice is rooted in simplicity and patience. From choosing low-cost index funds to resisting the urge to panic sell, his strategies are designed to help investors build wealth over the long term.
As you begin your investment journey, remember that staying informed, avoiding unnecessary risks, and focusing on long-term growth are the keys to success.
Are you ready to apply these tips to your investment strategy and see where they can take you? How will you take your first step toward building long-term wealth?
Masterworks Benefits
- Invest in art like a millionaire for a relatively low cost
- Art investments have outperformed the S&P 500 by over 131% for 26 years
- Purchase shares of artwork by top artists
- Hedge against inflation and diversify your portfolio
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